Technology Estimation

Abstract

In this chapter different statistical structures, which might be used as statistical foundation of DEA, will first be analyzed and one particular structure will be picked as appropriate for output-specific efficiency estimation. This will be followed by a formal description of how DEA may be utilized for a technology representation based on inputs and output-ratios (rather than outputs themselves) based on a fixed set of Farrell-efficient points, a straightforward extension of DEA ideas. Then a simple procedure for bias correction of DEA frontier point estimates will be sketched, because the standard estimates are known to be biased under any of the potentially underlying statistical structures and because such bias correction will also underly the reported results in Chapter 8.